Sherrod Brown right on banks but policy wrong

May 2, 2013

Sen. Sherrod Brown, D-Ohio, has the right idea but the wrong strategy. Brown has introduced a bill intended to safeguard taxpayers from having to bail out more "too big to fail" banks in the future. His method of doing that would add a burden to customers of both the mega-banks and some of their smaller, often less risky, cousins.

One of the costs of doing business at any financial institution is setting aside some assets to cover emergencies. That money cannot be invested effectively, if at all. And that costs bank customers and stockholders money.

Still, banks with more than $500 billion in assets - only a handful of those doing business in the U.S. - would have to set aside more money, if Brown's bill is enacted. Smaller banks also would face larger set-aside requirements, but only at about half the level demanded of the giants.

During the past several years, taxpayers have spent billions of dollars saving big financial institutions from collapse - because federal regulators deemed them "too big to fail." Brown does not believe taxpayers should subsidize risk-taking by the big banks.

He is right, but bank customers should not have to pay more for insurance of the type Brown envisions. Instead, federal regulators should get over their "too big to fail" kick. Refusing to bail out one or two mega-banks would have a salutary effect on their peers. That, not Brown's idea, should be federal policy.

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Police officers have enough trouble with public intoxication without being told, "Get lost, cop. I'm allowed to drink on the street."

A bill introduced in the state Senate could lead to just such an exchange in Ohio. It would allow cities with more than 50,000 residents to designate areas exempt from the state law against having open containers of alcohol in public.

"This would allow a festival atmosphere, an open atmosphere, much like the one on Bourbon Street in New Orleans and Beale Street in Memphis," state Sen. Eric Kearney, D-Cincinnati, explained.

Many Ohioans who have strolled down Bourbon Street at night may not want such an atmosphere in their cities. Yes, it may attract tourists, as proponents claim - but it is likely to attract trouble, too.

Surely Ohio's big cities can find better ways to attract visitors. State lawmakers should put a cork in the bill.